Bitcoin Consolidates $1 Trillion Market Value Futures Open Interest Hit New High

Last week, Bitcoin’s market trading price range was between US$57,168 and US$60,265, with a fluctuation range of about 5.4%. It is worth noting that its market value has exceeded US$1 trillion for a week, which is very important for Bitcoin and A strong positive sign for the entire crypto asset.

On-chain activity continues to solidify this trend, with daily transactions equivalent to more than 10% of the circulating supply, meanwhile, miners have returned to accumulation mode and on-chain metrics have all but reset. Interestingly, futures open interest has hit new highs, while volume and short liquidations are both down.

After breaking through the "$1 trillion" mark, the question before us is whether the market can sustain this level and what is the price support of BTC.

The URPD indicator displays on-chain volume as price clusters, forming an on-chain equivalent to the volume distribution often used in technical analysis. Where a large number of coins are traded within a particular price range, a strong support (or resistance) level is likely to form.

After exceeding the threshold of 1 trillion US dollars, the transaction volume on the entire network chain has reached 1.98 million BTC, which is equivalent to 10.6% of the circulating supply of Bitcoin. Impressively, this on-chain volume has formed one of the strongest levels of on-chain support since BTC prices went from $11,000-$12,000.

Grayscale Bitcoin Trust has traded at a negative premium for a month in a row: Grayscale Bitcoin Trust has now traded at a negative premium for 30 days. The negative premium suggests that institutional investors are rushing to sell their shares in the trust, perhaps preferring to invest in products with management fees below Grayscale’s 2% and avoid Grayscale’s brutal redemption schedule. (decrypt) [2021/4/3 19:42:08]

This volume cluster is likely to form a very strong support level and seems to be justifying Bitcoin's "$1 trillion" market cap.

To support this observation, we look back at the total transaction volume in USD over time. The table below uses Glassnode's Entity Adjustment Algorithm (EA), which filters out transfers that do not make economic sense (such as internal exchange transactions as well as self-transfers).

From 2019 to mid-2020, the Bitcoin network usually has a daily trading volume of EA of about $1.7 billion. Since then, the on-chain trading volume has increased by more than 720% along with the price. The current daily on-chain trading volume of the Bitcoin network is about $12.25 billion. This means that, in addition to the factor of the sharp rise in the currency price, the transaction volume has also increased, which supports and proves the performance of the bull market.

BB: Bitcoin may become the next global reserve currency: EOS founder Brendan Blumer tweeted: Looking at the growth of US dollar circulation in the past 12 months and the trajectory of the next 12 months, it is easy to see that Bitcoin will continue to grow in 2020. The gains are not huge, and the continued entry of institutions and sovereign states into the cryptocurrency space will dwarf everything that is so far. Banks and institutions are hoarding cash, and with the broader economy expected to recover from the effects of the COVID-19 pandemic and normalize in 2021, while capital begins to be lent out (borrowing using fractional reserves), fiat currencies will be worth more than ever Both low.

Bitcoin awareness and infrastructure will continue to grow rapidly, providing clear alternatives to fiat currencies, overvalued stocks, and gold. At the same time, institutions will continue to accelerate their embrace of Bitcoin, the regulatory framework will be continuously improved to provide strong market transparency, and governments around the world will begin to explore direct exposure. I believe this creates an irreversible situation where the next global reserve currency will be an open, global, finite, programmable and publicly verifiable currency. [2020/12/22 16:06:37]

Entity Adjusted Total Transfer Volume Live Chart

Voice | CNBC contributor: Bitcoin’s bull market is partly due to people’s fear of missing out on investment opportunities: According to ambcrypto, CNBC contributor, industry broker, and trader Jim Iuorio recently said that Bitcoin’s bull market is partly due to Because people fear missing out on investment opportunities. Fear of missing out in the current bull market is flooding capital into the virtual asset market. [2019/5/29]

Last week, we showed that long-term coin holders (LTH) have slowed down their holdings of old coins over the past three months, and this trend has continued into this week. In addition, miners have also joined in, and the miner net position change indicator is green, which indicates that miners choose to hold the newly mined coins.

While miners have less and less influence as sell-side entities (compared to daily transaction volume), their spending patterns provide insight into the sentiment of some of the biggest bulls in the Bitcoin market.

Real-time chart of miners' net position changes

The adjusted SOPR metric allows us to gain insight into how much profit we can achieve with coins spent per day (coins aged less than 1 hour are ignored). If profits are absorbed by old coins, the aSOPR will tend to be higher, conversely, when profitable coins remain dormant, the aSOPR indicator will tend to be lower.

Dynamics | Bitcoin’s 24-hour average turnover decreased by about 11.67%: According to public data, Bitcoin ranks first in the 24-hour turnover ranking, with an average turnover of $2,900.72 million, compared with the previous $3,284.12 million turnover A decrease of 283.4 million US dollars, a decrease of about 11.67%, accounting for 24.18%; ranked second is Tether, with an average turnover of 2,303.77 million US dollars, an increase of 265.47 million US dollars compared with the previous 2,038.3 million US dollars, an increase About 13.02%, accounting for 19.21%; ranked third is Ethereum, with an average turnover of US$1,352.07 million, an increase of US$57.98 million compared with the previous turnover of US$1,294.09 million, an increase of about 4.48%, accounting for was 11.27%. [2018/11/18]

The higher the aSOPR index, the more profit you can get from the table.

When aSOPR drops below 1.0, it means that the coins spent are in a state of overall loss.

In a bull market, we typically see the aSOPR indicator "reset," returning to near or below 1.0 during a price correction. This shows that the profitable coin has been dormant and investor confidence in holding the asset is being restored.

The aSOPR chart below shows two main observations:

This week, the aSOPR indicator has almost reset to 1.0, which indicates less profit-taking and hints that market confidence remains.

The consecutive peaks in aSOPR have declined over the past three months. This suggests that profits are waning as the bull market continues, again pointing to a long-term trend in market confidence.

Adjusted SOPR real-time chart

Finally, we review the distribution of wealth between long-term token holders (LTH) and short-term token holders (STH), which is often a periodic indicator of wealth transfer events.

The analysis pointed to some key observations:

Short-term holders (STH) have accumulated 440,000 BTC more BTC than long-term holders (LTH) have shed in the past 6 months, indicating that new demand in the market has outstripped long-term holders (LTH) The amount of reduction.

Relative wealth transfers are slowing, as indicated by the pink area. This will happen as long-term holders slow down their unwinding and coins accumulated over the past 6 months begin to mature.

A similar wealth transfer occurred around the 2017 peak, an interesting indicator to watch. This could be both a supply constraint (bullish) and a cyclical shift in holding behavior (swings are possible in either direction).

A key difference from 2017 is that short-term token holders (STH) now hold 66% of the circulating supply, much higher than their holdings of 58% at their 2017 peak. This shows that this cycle has increased "HODL" demand compared to historical cycles, but if it enters a bear market, it means that more coins will be at a loss.

Real-time chart of relative holdings of LTH and STH

Overall, miners and long-term coin holders alike have been aggressively bullish on the week’s trend over the past few weeks, while transaction volume supports the new trillion-dollar valuation.

The above analysis takes the spot market and on-chain traffic into consideration. But since this is the first Bitcoin bull market with significant derivatives trading, we will also look at the futures market to assess the overall performance of the derivatives market.

This week, futures open interest hit another all-time high with the amount exceeding $23.1 billion, with Binance and OKex accounting for the lion’s share, accounting for a combined 32% of the contract volume.

Real-time graph of futures open interest

Interestingly, futures volumes have been steadily declining throughout March, and this week has been particularly quiet compared to previous months' volumes.

Real-time graph of futures trading volume

The perpetual contract funding rate has also almost reset to neutral levels, suggesting either a reduction in excess long speculation or an increase in short interest to balance long traders.

Real-time chart of futures financing rate

Short liquidations have also declined over the past few months despite record open interest. This suggests that short sellers either had excellent risk management in the bull market or, more likely, many deployed risk-neutral strategies in "cash carry" trades.

Short liquidation real-time chart

The combination of high open interest, reduced futures volume, few short liquidations, and reduced funding rates supports the "cash carry" trade as a popular strategy in current market conditions.

Cash carry trades allow traders to combine long spot with short futures to lock in current funding rates/premiums while remaining risk neutral for price volatility, as more traders take advantage of this arbitrage strategy, open short positions Positions will increase, but there will be no corresponding liquidation as traders are net neutral through spot holdings.

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